CHINA'S

M-COMMERCE WAR CONTENTS

Market Overview

Influential Factors

Alibaba and Tencent Rivalry

Strategic Changes

SWOT & PESTLE

JAGADEESH JAGVIR JAYANTH JEGANNATH JOE LOKESH ANIRUDDHA

Market Overview 80,000

China - Anticipated to become the second

60,000
largest m-commerce market .
Within the period 2014-2018, the size of the
m-commerce market was forecasted to 40,000
increase by more than three times.
Quick shift in consumers usage of desktop
20,000
to mobile devices.
78.5% of Chinese internet users surfed
internet through their mobile handsets. 0
In 2018, size was expected to touch $ 123.8

10

11

12

13

14

15
billion.

20

20

20

20

20

20
Mobile Commerce Revenue in Millions
INFLUENTIAL Rising use of Social media for increased interaction

FACTORS
Rapid expansion of 3G networks
Widely accessible Wi-Fi hotspots
Reasonably price handset
Convenient ‘any time’ shopping with m-commerce
Competitive Environment for internet companies
Integration of more mobile service into mobiles.
Shopping – a social activity
The Specific Environment factor
It is the part of the environment that is directly relevant to the organization in
achieving its goals.
It is made up of critical constituencies that can positively or negatively
influence the organization and its effectiveness.
In China’s m-commerce market, for both Alibaba and Tencent, the
environment through the technological advancements of mobile internet and
the modified expectations of the consumers, offered a significant scope for
their individual development .
Major Players: BAT Google

Majority of the e-commerce market was controlled by Baidu, Microsoft

Alibaba, Tencent.
Facebook
(BAT) Among top ten web companies in the world
All three enjoyed a natural monopoly in their respective Yahoo

domains. Wikimedia
Consumers desired the speed and convenience for “any time”
Amazon
shopping via their mobiles. Alibaba and Tencent took
advantage of the consumer buying trend and started Alibaba
expanding from their respective domains.
Baidu

Tencent

00
50
0
0

0
0

50
25

75

1,2
1,0
 Alibaba and Tencent Rivalry:
The Alibaba group founded by Jack Ma in 1999 was the largest e-commerce company
in China with the concept of online marketplace.

Tencent, the biggest rival of Alibaba was founded in 1998 by Huateng Ma with the
objective of connecting the young users in the internet.

Both Alibaba and Tencent held their superiority in their respective domains.
Alibaba >> Online MarketPlace for B2B, B2C and C2C
Tencent >> Instant messenger application and interactive gaming
.
Strategic Changes by Tencent and Alibaba
Innovation Strategy
Introduction of major new products and services. This doesn’t mean the mere
simple changes from previous offerings but rather one for meaningful and unique
innovations.
In accordance with Miles and Snow’s four strategic types, both Tencent and
Alibaba were initially behaving as Defenders.
But as they saw viability in domains other than their own, they started venturing
with the aim of minimizing risk and maximizing the opportunity for profit.
Eventually became Analyzers.
Tencent also started diversified acquisitions and investments.
.
 Timeline
Alibaba Tencent
2003 - 2010 Until 2004
Got established in online marketplace with Tmall, Messenger Platform QQ and later on WeChat
Taobao (B2B, B2C and C2C)

2005
2011 Collaborated with Google for high quality search
experience and revenue through ads.
Tmall – largest independent online market place in
China
2012
Reorganization of business entities into six sub groups
2013

Tongxue – Online education vertical site through Taobao. 2013

For academic and vocational. Strategic collaboration with Sougou Inc
Laiwang mobile messaging app. (Very less users) Launched online education site.

2014 2014
Taobao – Leading m-commerce app Invested in Logistics firm, China South City to
expand its e-commerce(1.5 billion $)

Structural Changes by Tencent

Tencent reorganized itself into six subgroups
Corporate Development Group (CDG)

Interactive Entertainment Group (IEG)

Mobile Internet Group (MIG))

Online Media Group (OMG))

Social Network Group (SNG)

Technology and Engineering Group (TEG)

The aim was to unleash the
Company’s potential capabilities to
capture the opportunities of the
evolving internet industry.
They were also keen on pooling the
available technology and engineering
teams to develop the core of the
Business and support its growth.
Clash of Titans
Clash of Titans
 Strengths: Strengths:
High level R&D in technology
Significant market share in m-commerce
Dominant in instant messaging and many internet
wide range of services

Tencent
services
Alibaba

Well penetrated AliPay financial service

Growing customer base for their e-commerce Largest gaming business and stakes in many
website TMALL and TAOBAO popular games

Weakness: Weakness:
No growth in Alibaba’s Laiwang messaging Highly concentrated only in messaging and gaming
platform business.
company's research and development have lagged Even though their products are success in terms of
compared to its competitors sale but its positioning and unique selling
The vast majority of Alibaba’s revenue comes only proposition is not clearly defined
from eCommerce
 Opportunity: Opportunity:
Long time experience
Aggregator based model to reduce cost Dramatic increase in the mobile usage

Tencent
Alibaba

traditional finance system gave Alibaba the Introduction of new innovative services
opportunity to benefit from micro financial Increase in E-learning and payment services
services
can explore opportunities in AI domain
Increase in E-learning

Threat:
Competition with global rivals
Threat:
PRC laws and regulations
Local and global competitor
China's anti monopoly law(AML) and the Anti-
Stability of Chinese economy and government
Unfair Competition Law
China's anti monopoly law(AML) and the Anti-
Unfair Competition Law
 Regulations of Chinese Government,
1 Political US-China Trade war, Communist

PESTLE Government

M-Commerce Market in China

Increase income for people in China, Risk
2 Economical
related to acquisitions, Import tax threat

Youth population increase, Increase Mobile Time,

3 Social
Anti China wave across globe

Substitute Products, AI/ML scope for heterogenous population,

4 Technology Digitalise Supply chain management, Bundle services(super
app)

People Bank of China banned the use of QR codes and

5 Legal
virtual credit card, Anti-Trust laws, Data Protection Laws

Climate change has caused supply chain issues,

6 Environmental Pressure by NGO's for sustainable supply chain

management (SCM)
 INDUSTRY
1 Timely forecasting of change in the environmental factors and
environmental uncertainty
Takeaways

ORGANISATION
2 The strategic decisions when accompanied with suitable
restructuring proves more effective in attaining the organizational
goals

MANAGERS
The restructuring and diversification offered the management,
3
significant power to explore their opportunities and do acquisitions
but they should be aware of their limitations
 OSD References
Prof. : LATA DYARAM https://seekingalpha.com/article/4453000-the-
TA : NABILA KHAN china-narrative-is-broken-china-is-uninvestable-
for-now
Group 4
Quarter 1 https://studycorgi.com/alibaba-groups-
July - Sep organizational-values-and-structure/
Team
JAGADEESH ES MS21A024 https://www.digitalcrew.com.au/blogs-and-
JAGVIR SINGH MS21A025 insights/m-commerce-taking-china-storm/
JAYANTH HARSHA MS21A026
JEGANNATH U MS21A027
JOE LARSEN E MS21A028 https://www.channeladvisor.com/uk/blog/industry
K LOKESH MS21A029 -trends/mobile-commerce-in-china-what-can-we-
ANIRUDDHA KHOPDE MS21A031
learn/

Thank You